The new look of an old money center
Boston was once the front line of the revolutionary war, and the vestiges of revolution are all around. But now it's firmly establishment - old money, ivy league and school ties. This was also once a moderately sized money management center. But that's ancient history too. Institutions here have ballooned to over $1 trillion in equities under management, making this city Technimetrics' number four world target city for equities.
The investment management boom echoes Boston's recent resurgence of high-tech corporate finance. 'There was a time when 128 was king,' says Steven Frankel, direct of research at investment bank Adams Harkness & Hill, referring to Route 128 - Boston's Silicon Valley. 'When the minicomputer companies went out of business, our star fell a little bit. But a number of interesting start-ups that have sprung out of Massachusetts in the last three to four years have put us back on the map. We have more than held our own versus the west coast, and in biotech, this is one of the hotbeds.'
Sharon Merrill recalls a very different world in 1985, the year she founded Sharon Merrill Associates to do investor relations for New England companies. With the market roaring and New England-based banks tearing up the IPO trail, institutions like Fidelity, Putnam and Wellington were laying the foundations of a gargantuan asset base after staying around the same size for years. These giants have since spawned swarms of new fund managers.
'The larger the behemoth money management firms have become, the more the smaller ones have sprung up,' says Merrill. 'With the very old firms like Fidelity growing so large, a lot of people with a lot of experience want to strike out on their own.'
Jeffrey Vinik is the most famous example of a renegade institutional wonder kid. Then there's Warren Isabelle, who left Pioneer and founded Ironwood Capital, and Calvin Hori, who launched Hori Capital Management. Other new names are Boston Partners and High Rock Capital.
Add to that surging M&A activity in financial services, and the complexity of the Boston buy-side increases still more. 'There is a lot of activity, people coming and going,' notes Merrill. 'It's very important to keep track of who's where.'
The lesson for IROs visiting Boston is to carefully target the audience. In such a large arena, an unfocused roadshow could easily miss the band of portfolio managers who would be interested in a company's message, while wasting time on those who don't fit the profile.
'There's something for everybody here,' confirms Timothy Green, senior vice president at Nicolazzo & Associates, a Boston strategic communications agency. 'Virtually every kind of investment discipline is here. I was told the investment community here is still a world unto itself. Despite a lot of new players, it's still the mainstay of investors that have been here forever - particularly high-net-worth individuals and their managers in the booming private equity market. There especially, Boston is still difficult to break into for outsiders.'
Standing by to help, the local corps of investor relations consultants may not be as broad as New York's, but it still has variety. Along with Sharon Merrill, the only locally-based IR specialist, local PR firms like Nicolazzo are building strengths in IR, while national firms such as Morgen-Walke Associates and Financial Relation Boards have regional offices in the city.
Helen Maslocka of BuyCell Strategies, who last year yielded her post as Boston's Niri chapter president to Staples' Sam Levenson, is currently looking to break into the investment community as COO for a pre-IPO start-up. 'You used to have to go to New York, but now the venture capital community here has blossomed,' she says. 'There's a lot of money out there, and investors are looking for good places to put it.'
ven Fidelity, the epitome of Boston tradition and breeding, has venture funds available for early stage companies under the banner of Fidelity Capital. And the likes of Highland Capital Partners, HLM Management and Atlas Venture lodge a challenge to Silicon Valley's more traditional venture capital pre-eminence.
While the buy-side has boomed, Boston's sell-side has remained small - but not unimportant. Key firms like Adams Harkness & Hill and Cowen & Co, with their niche strengths, are important roadshow stops for certain types of firms. Other players First Albany, Tucker Anthony, and Fechtor Detwiler & Co also have a strong sell-side force here. These firms have all developed and prospered on the strength of Boston's high-tech boom.
Interesting times are ahead for Boston's financial community: traditionally strong sell-side research players like Cowen & Co and AH&H have fledgling asset management operations, while AH&H has been building an investment banking business with $1.6 bn underwritings over the last 2 years.
'There is something to be said for regional research,' notes Steve Frankel of Adams Harkness & Hill. 'Analysts cover companies in their own backyard better than companies that are halfway across the country. But while our roots are in covering local companies, in recent years we have expanded so that now we have a truly national product.'
Take, for example, one of AH&H's strongest areas of coverage, information technology services, initiated especially for Cambridge Technology Partners. Back then Cambridge was under $50 mn in market capitalization. Today it's well over $1 bn and a leader in IT services, while AH&H has parleyed its expertise into an IT services research team of three analysts with national coverage. 'It's the springboard effect', says Frankel. 'You get to know a company well in your own backyard, then you can go and look for similar companies elsewhere.'
Along with its breadth of coverage, AH&H has kept expanding its landmark investor conference that takes place at the beginning of August, with over 100 companies presenting in front of more than 250 institutional investors over three days. The time of year means fewer conflicts for everyone, and many professionals bring their families to enjoy summer in New England while they get down to business.
More highlights of Boston's conference calendar are Cowen & Co's early spring emerging technology and healthcare conferences. But that's not the extent of most companies' visits to Boston. Sharon Merrill encourages her clients to conduct meetings in Boston along with New York every quarter, and notes that Boston always yields a good crowd of 20-25 for a group meeting, with a packed schedule of one-to-ones with investors for the rest of the day.
Boston analyst meetings are almost always in the downtown financial district, with the centrally-located Meridien hosting the bulk of these. Some companies with ivy league executives opt for the Harvard Club for meetings, and Boston College is due to set up a downtown club. Nicolazzo's Green notes that the turnout for Boston meetings tends to be more consistent than in New York because it doesn't have the disadvantage of New York's downtown/midtown schism.
Merrill cautions that Boston meetings are all business: 'This is not a schmoozy town for meetings. Fund managers expect a quick, crisp, orderly meeting with all the facts at hand - start on time, finish on time; move 'em in, move 'em out. Boston is not the kind of place where you sit down for a couple of hours for a lengthy meeting. No lingering at luncheons either.'
End-of-the-day meetings are not popular. With such a geographically concentrated business district, Bostonians pack their meetings close. But at the end of the day they want to be at home. Of course, visiting companies can make the most of it, scheduling meetings close together - say, every 45 minutes.
True to Boston's billing as 'the walking city', most people stroll happily between downtown meetings - Fidelity, Putnam and Wellington are all in this area - then take the subway over to the Back Bay area to visit Massachusetts Financial, John Hancock, and Keystone. That subway ride takes visitors right to the middle of cosmopolitan Newbury Street and Copley Plaza, thick with galleries and shopping.
Using a car in Boston is not recommended: the city's 'big dig' construction project makes driving a nightmare. Even getting from the airport to downtown is best accomplished on the water shuttle. When nothing but a limo will do, Boston Coach is almost the only choice for IROs. After all, this limo service - soon to spread to New York - is owned by Fidelity itself.
In terms of media relations, the Wall Street Journal's new regional approach has been especially significant for Boston. A local bureau and Wednesday's New England Journal provide a lot of coverage for the companies and institutions in the region. Meanwhile, the Boston Globe, acquired by the New York Times, has managed to keep its flavor. Then there's the Boston Business Journal and for very local exposure, Boston boasts a lot of strong local weeklies, most owned and fed content by Fidelity's CNI.
Boston's notoriously outspoken cabbies may yet have the last word: 'Forget what you read in the newspaper about the economy, or what the government says,' ten-year veteran Henry Selik strongly urges as he zooms around Route 128. 'Out on the street, I can tell whether people are coming out of the stores with more or fewer bags, whether the hotshots with their power ties are going out for lobster or a slice of pizza like the rest of the goddamn schmucks.'
The pundit's verdict? 'The market is going to go belly-up soon.' After all, Selik adds, 'mutual funds are just a sucker's sport, sheer idiocy...one giant Ponzi scheme.'
WHERE TO PRESENT
250 Franklin Street
Tel: +1 617 451 1900
Fax +1 617 423 2844
The number one venue
Boston Harbor Hotel
70 Rowes Wharf
Tel: +1 617 439 7000
ax: +1 617 345 6799
Bay Tower Room
60 State Street
Tel: +1 617 723 1666
Fax: +1 617 723 7887
Turns into a romantic restaurant in the evening
WHERE TO STAY
Marriott Long Wharf
296 State Street
Tel: +1 617 227 0800
Fax: +1 617 227 2867
at Faneuil Hall Marketplace
Tel: +1 617 523 3600
Fax: +1 617 523 2454
Small, European-style in Quincy Market
15 Arlington Street
Tel: +1 617 536 5700
Fax: +1 617 536 9340
200 Boylston Street
Tel: +1 617 338 4400
Fax: +1 617 423 0154
WHERE TO EAT
Anthony's Pier 4
140 Northern Avenue
Tel: +1 617 482 6262
Historical landmark on the ocean, the place for seafood
105 Water Street
Tel: +1 617 292 9966
148 State Street
Tel: +1 617 726 7600
Grill 23& Bar
161 Berkely Street
Tel: +1 617 542 2255
Morton's of Chicago
One Exeter Plaza
Tel: +1 617 266 5858
272 Boylston Street
Tel: +1 617 426 7878
Very upscale, trendy
327 Newbury Street
Tel: +1 617 351 2500
Another trendy eaterie
THINGS TO DO
Self-guided revolutionary war tour
Bull & Finch Pub
84 Beacon Street
The Computer Museum
300 Congress Street,
near South Station
Tel: +1 617 423 6758
WWII amphibious vehicles
Tel: +1 617 623 DUCK